Papua New Guinea's economy is expected to grow faster than the global average this year, supported by both its resource and non-resource sectors, according to the latest Westpac PNG Economic Update and Outlook, which Prime Minister James Marape said validates the government's economic reforms.
Westpac forecasts Papua New Guinea's real gross domestic product (GDP) to expand by 4.6% in 2026, following an estimated 5.5% growth in 2025, driven by stronger performance in agriculture, industry, communications, services and the country's resource sector. The projection is well above the 2.5% global growth forecast by the World Bank for 2026.
Marape said the report provides independent evidence that Papua New Guinea has remained resilient despite global economic headwinds, including geopolitical conflicts, inflation, commodity price volatility and the lingering effects of the Covid-19 pandemic.
"The independent assessment from Westpac is clear: our economy is resilient, it is growing, foreign exchange conditions are improving, our exports are earning more, and major investments are progressing," Marape said.
The prime minister said the report reflects the results of economic reforms introduced since his government took office in 2019, including fiscal consolidation, foreign exchange reforms, infrastructure investment and efforts to diversify the economy beyond its traditional reliance on oil, gas and mining.
Economy broadening beyond resources
According to Westpac, growth is no longer being driven solely by the extractive industries.
The report cited continued expansion in agriculture, manufacturing, communications and services, with increased economic activity also evident in provincial centers. The communications sector, in particular, has benefited from improved digital connectivity through the rollout of Starlink satellite internet services and the Pukpuk-1 submarine cable.
Marape said the findings support the government's strategy of building a broader economic base by promoting agriculture, fisheries, forestry, tourism, downstream processing and small and medium-sized enterprises.
"Our vision since 2019 has been to grow a broad-based economy in which agriculture, fisheries, forestry, tourism, manufacturing, downstream processing, communications and small-to-medium enterprises play a much larger role," he said.
Foreign exchange conditions improve
The report also pointed to significant improvements in Papua New Guinea's foreign exchange market, one of the country's longstanding economic challenges.
Westpac said foreign exchange availability has improved, with shorter clearing times and better market liquidity, attributing the gains partly to reforms supported by the International Monetary Fund and measures implemented by the Bank of Papua New Guinea.
Marape said addressing chronic foreign currency shortages has been one of his administration's priorities, noting that businesses had previously faced lengthy delays in accessing foreign exchange.
He said the government will continue working with the central bank, commercial banks, exporters, resource companies and development partners to further improve market liquidity and foreign exchange access.
Export earnings remain strong
Westpac said export earnings continued to strengthen, supported by stable liquefied natural gas production and higher global commodity prices.
Papua New Guinea exported about 3.73 million metric tons of LNG by May 2026, while gold exports benefited from higher international prices and stronger production. Cocoa exports also posted solid earnings, with coffee remaining an important contributor following favorable global prices.
Marape said the performance underscores the importance of supporting both large-scale resource projects and renewable agricultural industries that directly benefit rural communities.
Inflation contained despite global pressures
The report estimated annual inflation at 2.24% during the March quarter of 2026, although price pressures varied across the country.
Marape said the government remains mindful of the impact of rising living costs and pointed to its K1 billion fuel price stabilization program, which capped domestic fuel prices at March 2026 levels to cushion households and businesses from higher global fuel and freight costs linked to tensions in the Middle East.
Major projects to drive medium-term growth
Westpac identified the proposed $14 billion Papua LNG project as Papua New Guinea's most significant medium-term growth driver, with a final investment decision expected later this year.
The report also highlighted the potential contribution of the Wafi-Golpu copper-gold project and continued infrastructure investments under the Connect PNG Program, which aims to improve national transport connectivity.
Marape said these projects are expected to generate employment, attract investment, increase government revenue and strengthen foreign exchange inflows while complementing growth in agriculture, communications, construction and services.
Government cites reform progress
Marape said his administration inherited an economy burdened by fiscal pressures, foreign exchange shortages, high debt servicing costs and delayed investment projects in 2019.
Since then, the government has pursued reforms aimed at restoring macroeconomic stability, improving investor confidence, expanding infrastructure and increasing support for agriculture and small businesses, he said.
The prime minister acknowledged that challenges remain but said multiple international institutions continue to project positive economic growth for Papua New Guinea.
In addition to Westpac's 4.6% forecast, the International Monetary Fund expects the economy to grow 3.8% this year, while the Asian Development Bank projects 3.6% growth. Both institutions have also cited the country's improving macroeconomic conditions and resilience.
Looking ahead to the 2027 national elections, Marape said the government would continue pursuing disciplined fiscal management and long-term economic reforms rather than short-term political spending.
"We are not claiming that every problem has been solved," he said. "But the evidence shows that our economy is growing, our resilience is strengthening, and the future remains promising."
